SHORT TERM: gap up and go Tuesday, DOW +349
Overnight the Asian markets gained 1.8%. Europe opened higher and gained 1.5%. US index futures were higher overnight. The market gapped up at the open to SPX 1946 and continued to rally. The SPX had closed at 1932 yesterday. At 10am Construction spending was reported higher: +1.5% v +0.1%, and ISM manufacturing was reported higher: 49.5 v 48.2. The rallied continued throughout the day, with small 4-5 point pullbacks. In the last hour of trading the SPX hit 1978, dipped five points, then closed at 1978.
For the day the SPX/DOW gained 2.25%, and the NDX/NAZ gained 3.00%. Bonds lost 29 ticks, Crude gained 60 cents, Gold slid $9, and the USD was higher. Medium term support rises to the 1973 and 1956 pivots, with resistance at the 2019 and 2043 pivots. Tomorrow: the ADP index at 8:15, then the FED’s Beige book at 2pm.
The market had a gap opening for the first time this week, sixth time since the beginning of last week, and the tenth time since the SPX 1810 downtrend low. Ten gap openings in twelve trading days. After closing at the low of the day yesterday, SPX 1932, the market gapped up to 1946 and rallied to a new uptrend high at 1978. This has been quite a rally in just 12 trading days: +9.3%. During the first two uptrends of the previous bear market, the SPX rallied a similar 8.4% in 11 days, and 9.9% in just 7 days. With the Major wave B uptrend now confirmed in all four major indices, we should start looking for it to end soon. At today’s high the SPX has retraced more than 50% of the Major A downtrend, has reached the 1973 pivot range, displays an Int. C nearly exactly 0.618 of Int. A, is quite overbought short term, and is displaying a negative divergence on the daily RSI. Plenty of technicals to start completing an uptrend. Short term support is at the 1973 and 1956 pivots, with resistance at SPX 1999 and the 2019 pivot. Best to your trading the Beige book!
MEDIUM TERM: uptrend
LONG TERM: bear market